Asset disposals for Chester Lime Drills

1. Chester Lome drills well for residential and commercial lots. In April 2008. Chester decided to scrap his well drilling truck, purchased in 1984 for $25,000 and fully depreciated
Prepare the journal entry recording the scrapping of the truck.

2. Alik Amal is a bar in Panama City, Florida, in April 2008, rowdy spring break guests damaged a jukebox that had been purchased in 1995 for $800. The Jukebox had a useful life of ten years, with an estimated salvage value of $75. Alik Amal decided to scrap the jukebox after the incident.
Prepare the journal entry recording the scrapping of the jukebox

3. Lopez lumber purchased a precision saw in March 2006 for $4,000. The saw was expected to last five years with no salvage value. Lopez uses the straight-line depreciation method.
Lopez decided to purchase a new saw in March 2008 and was able to sell the old saw for $2,000.
Prepare the journal entry recording the sale of the old saw.

4. Toth Architects purchased a color plotter for $5,000 in Jan 2006. The plotter was expected to last five years with a $500 salvage value. Toth uses the double-declining balance method to depreciate the plotter.
Toth chose to upgrade to premium model in Jan 2007 and sold the old plotter to Dunn Drafting for $2,500
Prepare the journal entry recording this sale of old plotter.

Solution Preview

1. Chester Lome drills well for residential and commercial lots. In April 2008. Chester decided to scrap his well drilling truck, purchased in 1984 for $25,000 and fully depreciated
Prepare the journal entry recording the scrapping of the truck.

Debit
Accumulated Depreciation 25000

Credit
Equipment 25000

Fully depreciated means that the accumulated depreciation is the cost less salvage. They don't give you a salvage so I presume it is zero. So, no gain or loss as it is fully depreciated without salvage value ...

Solution Summary

Your guide is simple and direct -- indicating the accounts involved and the debit/credit amounts.